Question

Annual salary plus bonus data for chief executive officers are presented in the BusinessWeekBusinessWeek Annual Pay Survey. A preliminary sample showed that the standard deviation is $675\$675 with data provided in thousands of dollars. How many chief executive officers should be in a sample if we want to estimate the population mean annual salary plus bonus with a margin of error of $100,000\$100,000? (Note: The desired margin of error would be E=100E=100 if the data are in thousands of dollars.) Use 95%95\% confidence.

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We have given:

  • standard deviation of σ=675\sigma=675,
  • desire margin of error of E=100E=100.

Our task will be to determine the sample size which provides the desired margin of error at the (1α)=95%(1-\alpha)=95\% confidence level.

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